Approaching football World Cup prompts AB InBev to spend on building brands

Picture: FRANCOIS LENOIR/REUTERS

 The world’s largest brewer is ramping up spending on marketing initiatives ahead of the soccer World Cup in June, after promotions helped buoy demand in Colombia and Peru.

Anheuser-Busch InBev’s (AB InBev’s) first-quarter earnings growth of 6.6% surpassed analysts’ estimates, and the company said on Wednesday that it was “confident” that growth would quicken, especially in the second half. The stock rose as much as 4.4% in early Brussels trading.

Budweiser’s campaign for the World Cup, the most-watched sporting event globally, began this week. The initiative comes as AB InBev works to drive more revenue from athletic tournaments and social occasions after the past decade’s influx of smaller brands weaned drinkers off its mass-market brews.

To address that challenge, the Belgium-based company is investing $2bn in promoting its brands and improving supply chains in the US

The beverage company’s results were “a relief, and growth looks set to accelerate,” Olivier Nicolai, an analyst with Morgan Stanley who rates the shares the equivalent of buy, said in a note to clients.

In Colombia, the Aguila brand increased sales more than 50% in the first quarter, helped by adverts that fuelled nostalgia for the last time the country played in the World Cup. Cristal performed well in Peru, as the brand is supporting the national team.

The 2018 World Cup will be held in Russia, a market dominated by Carlsberg. The Danish brewer said last week the Russian market shrank by about 5% in the first quarter, hurt by restrictions on bottling and the threat of international sanctions on the country’s economy.

AB InBev said it planned World Cup promotions for Budweiser in Argentina and in Nigeria, where it started selling the brand in March.

The event is “an opportunity for us to step up Budweiser execution in terms of brand performance in all the markets we operate in,” chief financial officer Felipe Dutra said on a call with reporters.

One of the first adverts in the new campaign involves hundreds of drones flying beer bottles from Budweiser’s home in St Louis, down the shores of Rio de Janeiro, through the jungles of Latin America and over snowy mountain ridges. They drop off the beverages in Shanghai’s city centre, in British pubs and finally at Moscow’s soccer stadium.

AB InBev’s shares rose 2.1% to €84.46 at 10.23am They’ve lost about a quarter of their value since the company acquired SABMiller in 2016 in the industry’s largest deal to date. The company said it had cost savings of $160m related to the SABMiller purchase in the first quarter.

source:-businesslive